UNIVERSITY OF SANTO TOMAS

FACULTY OF CIVIL LAW

LABOR LAW II – Atty. Ronald Marquez

Manila Electric Company v. Secretary of Labor

G.R. No. 127598, January 27, 1999
Ponente: Martinez, J.

Facts:
On September 7, 1995, the MERALCO Employees and Workers Association (MEWA)
informed herein petitioner MERALCO of its intention to re-negotiate the terms and
conditions of their existing 1992-1997 Collective Bargaining Agreement covering the
remaining period of two years starting from December 1, 1995 to November 30, 1997.
MERALCO signified its willingness to re-negotiate through its letter and formed a CBA
negotiating panel for the purpose.
On November 10, 1995, MEWA submitted its proposal to MERALCO, which, in turn,
presented a counter-proposal. Thereafter, collective bargaining negotiations proceeded.
However, despite the series of meetings between the negotiating panels of MERALCO and
MEWA, the parties failed to arrive at "terms and conditions acceptable to both of them.”
On April 23, 1996, MEWA filed a Notice of Strike with the National Capital Region
Branch of the National Conciliation and Mediation Board of the Department of Labor and
Employment on the grounds of bargaining deadlock and unfair labor practices. The NCMB
then conducted a series of conciliation meetings but the parties failed to reach an amicable
settlement. Faced with the imminence of a strike, petitioner MERALCO filed an Urgent
Petition with the Department of Labor and Employment praying that the Secretary assume
jurisdiction over the labor dispute and to enjoin the striking employees to go back to work.
The Secretary of Labor, then took jurisdiction of the dispute and resolved the same
by changing parts of the Collective Bargaining Agreement in awards—to which petitioner
MERALCO contested, citing that the Secretary of Labor committed grave abuse of discretion
amounting to lack or excess of jurisdiction, and sought to reconsider parts with relation to
the wage increases, leaves, decentralized filing of paternity and maternity leaves, bonuses,
retirement benefits, optional retirement, medical, dental, and hospitalization benefits, short-
swing, and payroll treatment.

Issue/s:
Whether or not the orders of the Secretary of Labor with respect to the Collective
Bargaining Agreement are in excess of jurisdiction as the terms and conditions does not
reflect the parties’ intentions. (Labor II, Right to Self-Organization)
Ruling:
Yes. The Supreme Court ruled that the Secretary of Labor acted arbitrarily in ordering
the inclusion of benefits, terms and conditions that the law and the parties did not intend to
be reflected in the Collective Bargaining Agreement: the signing bonus, the inclusion of
confidential employees in the rank and file bargaining unit, and in mandating the union
security “closed shop” regime in the bargaining agreement.

The Secretary of Labor’s statutory power under Art. 263 (g) of the Labor Code to
assume jurisdiction over a labor dispute in an industry indispensable to the national interest,
and, to render an award on compulsory arbitration, does not exempt the exercise of this
power from the judicial review that Sec. 1, Art. 8 of the Constitution mandates.

Furthermore, the ruling of the Secretary of Labor intruded into the employer’s
freedom to contract by ordering the inclusion in the new CBA all other benefits presently
enjoyed by the employees even if they are not incorporated in the new CBA. This matter of
inclusion, petitioner MERALCO argues, was never discussed and agreed upon in the
negotiations; nor presented as issues before the Secretary; nor were part of the previous
CBA’s between the parties.

To avoid the possible problems that the disputed orders may bring, the Supreme
Court is constrained to rule that only the terms and conditions already existing in the current
CBA and was granted by the Secretary (subject to the modifications decreed in this decision)
should be incorporated in the CBA, and that the Secretary’s dispute orders should
accordingly be modified.
With the foregoing, the Supreme Court ordered the parties MERALCO and the
MERALCO Employees and Workers Association to execute a Collective Bargaining
Agreement incorporating the terms and conditions contained in the unaffected portions of
those modified by the Secretary of Labor.

—K.L.R.F. 25022021
35th EDSA Revolution